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Goldman Sachs to Open a Bitcoin Trading Operation

255 points by hapnin 8y ago

jjxw 8y ago
Sounds like a reasonable operation to set up. Goldman is ostensibly in the business of selling shovels in a gold rush so if enough of their clients are demanding a product that gives then exposure to bitcoin then Goldman senses there's money to be made here in fees.
- atomical 8y ago
  They probably feel they have an edge trading against the typical crypto trader.
  - keyle 8y ago
    Well they certainly do, the 'market' is very inefficient.
    - atomical 8y ago
      I doubt they are interested in providing liquidity for an unproven technology and currency though.
  - pembrook 8y ago
    They’re doing this so their clients can trade bitcoin in various ways and they can make fees off of it. Their prop traders won’t be trading directly against you with the bank’s money.
- forapurpose 8y ago
  > reasonable I'm not sure what is meant by that word, but in addition to profit there are questions of ethics, and the enlightened self-interest of wanting a reputation for integrity, a stable financial system in which people feel its safe to participate, and a society built on merit and integrity. Profit alone isn't a good guide to business decisions.
  - jjxw 8y ago
    Agreed. To clarify, I use the term in a narrow sense limited to what I imagine to be "reasonable" from the profit seeking point of view of Goldman.
- rando444 8y ago
  Aside from shovels, Goldman Sachs is also in the business of commodity manipulation, as showcased by their rather ridiculous aluminium scheme. Bitcoin is a commodity, and with the amount of money they have at their disposal, I can only imagine fees aren't the only thing they're going to focus on.
seibelj 8y ago
One element I find fascinating about the cryptocurrency / blockchain / ICO debates on HN and elsewhere is that there are 2 diametrically opposed sides with passionate advocates. On one side are the boosters that think it is a great innovation with enormous potential. The other side thinks blockchain is practically useless, the most overhyped technology ever created, a bubble never-before seen in history. Yet every day there are stories (such as this article) showing crypto becoming more deeply ingrained in mainstream circles. New projects and new companies are forming consistently, just like with any new disruptive technology. But some very knowledgable people continue to argue with passion that the entire technology is a useless fraud! However this pans out, there are going to be a lot of people on one side that were totally, completely wrong. I doubt there is much middle ground for this.
- elorant 8y ago
  And then there are those of us who sit in the middle. Regardless of whether Bitcoin is a bubble or not, the thing is that you can't do much with it. There are few companies here and there that support it but for the best part everyone's sitting on their stack waiting for wider adoption from the real world in the future. As long as this isn't happening the whole discussion regarding Bitcoin is irrelevant. What's the point of having "money" you can't use as such.
  - xxxdarrenxxx 8y ago
    Traditional money value has little to do with money anyway. America has an insane debt. Yet they still have power, while a single person with such relative debt goes to jail. Likewise, in terms of raw resources and precious material potentials, Europe has nothing in the ground compared to africa, but who are considered more wealthy by image, physical living standards and trade equity. Money is not really backed by gold or numbers, but backed by power off governments behind them and the (potential) whooping they will bring. However fancy a currency is, a government decides whether it will be acknowledged globally and within society.
- asynchrony 8y ago
  I don't think there's that much disagreement over the effectiveness of blockchain for managing decentralized ledgers (cryptocurrencies). There's rather more contention about the applicability of blockchain to other spaces.
21 8y ago
Imagine that the year is 2011, Bitcoin appears for one of the first times on HN, and someone says "in the future Goldman will trade bitcoin". Ha ha ha ha ha.... Today, someone (me) says: in the future, first world central banks will hold bitcoin as a reserve among the usual things (dollars, euros, gold, ...)
- atomical 8y ago
  What does being right about a prediction mean to you?
  - 21 8y ago
    I'm not sure what you are asking here. I do trade bitcoin, with an eye towards holding it for a bunch of years, possibly with leverage, so being right would make me money.
    - atomical 8y ago
      You seem quite amused that you were right about a prediction. It must mean something to be right about the future, correct? Some personal achievement?
- lern_too_spel 8y ago
  Goldman isn't holding Bitcoin itself. They're not stupid.
  - Scott_Sanderson 8y ago
    Why would they be stupid to hold the bitcoin themselves? If they don't hold the private keys, then whoever does could lose them.
    - colatkinson 8y ago
      If they hold the Bitcoin themselves, they have to deal with securely holding the keys, compliance, and insurance. If someone else holds them, then this third party has all of these issues while GS will still get some kind of insurance payout if there is a catastrophic loss. Similarly, I doubt that GS commodity traders have warehouses full of gold/silver/oil.
pembrook 8y ago
Re: Goldman’s activity pumping and dumping IPO’s they knew to be worthless to screw over retail investors during the late 90s tech bubble. Read Matt Taibbi’s hyperbolic yet mostly accurate Rolling Stone article for more info. It’s safe to assume Goldman isn’t neccesarily getting into bitcoin because it believes in the technology.
- klipt 8y ago
  They believe it will make them money, which is all they care about. Bitcoin probably won't cure cancer, but Goldman isn't in the business of curing cancer anyway...
  - ISL 8y ago
    They would be if they knew how, as would almost anyone else.
    - klipt 8y ago
      Not really? There are professional oncology researchers out there but they work at universities, research hospitals, and pharma companies, not finance companies like Goldman.
BigChiefSmokem 8y ago
The mighty USD is going to have a rough time going up against the Yuan (and the Silk Road) and Bitcoin to be crowned as the new global standard.
- nikolay 8y ago
  In a doomed parallel universe - sure!
- MadSudaca 8y ago
  If the dollar has it rough we'll all have it rough.
- bcheung 8y ago
  Always bet on the US banking industrial complex securing its interests by whatever means necessary. All of this has happened before and will happen again. https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
  - anonytrary 8y ago
    This is... appalling and depressing.
nikolay 8y ago
So Bitcoin is anything but it was it was supposed to be. And I wonder why people still care about this scam!
- DINKDINK 8y ago
  >Bitcoin is anything but it was it was supposed to be Bitcoin was suppose to be an open, peer-to-peer, decentralized, self-sovereign value transfer network. After GS facilitates BTC trades, bitcoin will be an open, peer-to-peer, decentralized, self-sovereign value transfer network.
joejerryronnie 8y ago
Goldman Sachs is not opening a bitcoin trading operation because they believe in the legitimacy of blockchain tech. The only reason Goldman is doing this is because they smell money and realize that jumping into a bubble can net them hundreds of millions/billions of dollars in profit. They are not going to make money from buying bitcoin, they are going to make money in fees they charge other large clients to buy/sell/hedge/etc bitcoin. They'll also create some exotic bitcoin-based financial instruments that nobody can understand but will sell to pension funds for gobs of money. Will blockchain revolutionize tech and business in general? Will a Bitcoin be worth a million bucks some day? Will crypto replace traditional currency? I don't know - but I guarantee that is not the angle Goldman is playing here.
- d0ugie 8y ago
  Goldman is experimenting, not smelling big bucks. Other firms, namely JPMorgan, won't touch bitcoin for the same reasons they train every employee over and over how to stay away from money laundering red flags. Banks have populist targets on their backs, getting involved with Bitcoin elevates the bright redness of those targets. But Goldman is uniquely smart and I'm intrigued. Guess I'll add them as a custom Google News section...
  - joejerryronnie 8y ago
    Goldman is very smart but they are also willing to throw ethics out the window and put huge swaths of society at financial risk if they can capitalize on it. I like them as an investment but they are kind of the epitome of capitalism's worst excess.
bunkydoo 8y ago
Goldman Sucks
- dang 8y ago
  Maybe so, but please don't post unsubstantive comments here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
known 8y ago
Can Blockchain replace Fed?
- sjwright 8y ago
  No, because there is always a need for artificially stabilised currency. When you bought lunch today, you know you weren't being ripped off because $10 is worth the same as yesterday, and roughly the same as when you earned it a few months ago.
  - rmnblm 8y ago
    Take a look at https://makerdao.com/ https://makerdao.com/
  - anonytrary 8y ago
    > No, because there is always a need for artificially stabilised currency. This is a mathematical assertion and requires a proof.
    - sjwright 8y ago
      No, it's a musical assertion and requires lyrics. That's how dumb you sound.
      - anonytrary 8y ago
        > That's how dumb you sound. This is HackerNews, not Reddit; comments like this are typically ignored. You are claiming that all currencies require active stabilization; that a currency is unstable without outside intervention. Where's the economics that supports your claim? You can cite it, if you want. Your retort regarding music is irrelevant, and it looks like you missed my point. Instead of writing a paragraph, I observed that you are "making an inherently theoretical claim which you haven't backed up". Why do you believe intervention is required for stability? Do you have a theory; can you cite a theory? I'm not sure why the question was confusing to you, nor why you took it as an offense. I'm sure other people would love to hear you justify your socialist, "hands-on" viewpoint.
rajacombinator 8y ago
Where there are muppets ...err clients ... to be fleeced, Goldman will be there!
adolfinthecuts 8y ago
fuck em, we'd all love to jack for shekelbits duck em, its not for the jew satoshi to my central intelligence you're obsolete delete, defeat, meat its not for the jew anonymous killers on your street tel aviv to jerusalem my sense no combat robots on the beat another titanic sunk .. stunk .. w on on on tigers blood copies of self replicating dud kike im pumpin gas takin shekelbits you were selfish , hellish , wellish ish electrocute fish aint no takin shekelbits duds see the flash and go blast to black you will never see th e last
partycoder 8y ago
There might be many bad aspects about cryptocurrencies. But they don't have to be perfect, they just need to be better than what currently exists. ACH and SWIFT are, at their very best, mediocre and sad when technologically compared to blockchain. In fairness though, if all transactions made it into a blockchain, fewer and fewer people would be able to store it in their computers, let alone process it.
- pedrocr 8y ago
  >ACH and SWIFT are, at their very best, mediocre and sad when technologically compared to blockchain. Quite the contrary. Modern banking transfer technologies are much better than Bitcoin at what they do. They're orders of magnitude more energy efficient and also much faster than waiting for blockchain confirmation of transactions. Banks are usually quite bad at exposing that functionality to clients but the actual technology beats Bitcoin easily. That's not even surprising. Sending a few messages over the internet and updating a couple of database registers is massively simpler than running a distributed PoW ledger.
  - Chris_Jay 8y ago
    I want to know where you bank.
    - pedrocr 8y ago
      "Banks are usually quite bad at exposing that functionality to clients" And here are those technologies properly exposed: https://play.google.com/store/apps/details?id=pt.sibs.android.mbway&hl=en_US https://play.google.com/store/apps/details?id=pt.sibs.androi... Immediate transactions between individuals in the traditional banking system.
ashelmire 8y ago
This was news in the fall, wasn’t it? Trying to renew the hype it seems. https://www.bloomberg.com/news/articles/2017-12-21/goldman-is-said-to-be-building-a-cryptocurrency-trading-desk https://www.bloomberg.com/news/articles/2017-12-21/goldman-i...

255 points by hapnin 8y ago

jjxw 8y ago

Sounds like a reasonable operation to set up. Goldman is ostensibly in the business of selling shovels in a gold rush so if enough of their clients are demanding a product that gives then exposure to bitcoin then Goldman senses there's money to be made here in fees.

atomical 8y ago
They probably feel they have an edge trading against the typical crypto trader.
- keyle 8y ago
  Well they certainly do, the 'market' is very inefficient.
  - atomical 8y ago
    I doubt they are interested in providing liquidity for an unproven technology and currency though.
- pembrook 8y ago
  They’re doing this so their clients can trade bitcoin in various ways and they can make fees off of it. Their prop traders won’t be trading directly against you with the bank’s money.
forapurpose 8y ago
> reasonable I'm not sure what is meant by that word, but in addition to profit there are questions of ethics, and the enlightened self-interest of wanting a reputation for integrity, a stable financial system in which people feel its safe to participate, and a society built on merit and integrity. Profit alone isn't a good guide to business decisions.
- jjxw 8y ago
  Agreed. To clarify, I use the term in a narrow sense limited to what I imagine to be "reasonable" from the profit seeking point of view of Goldman.
rando444 8y ago
Aside from shovels, Goldman Sachs is also in the business of commodity manipulation, as showcased by their rather ridiculous aluminium scheme. Bitcoin is a commodity, and with the amount of money they have at their disposal, I can only imagine fees aren't the only thing they're going to focus on.

seibelj 8y ago

One element I find fascinating about the cryptocurrency / blockchain / ICO debates on HN and elsewhere is that there are 2 diametrically opposed sides with passionate advocates. On one side are the boosters that think it is a great innovation with enormous potential. The other side thinks blockchain is practically useless, the most overhyped technology ever created, a bubble never-before seen in history. Yet every day there are stories (such as this article) showing crypto becoming more deeply ingrained in mainstream circles. New projects and new companies are forming consistently, just like with any new disruptive technology. But some very knowledgable people continue to argue with passion that the entire technology is a useless fraud! However this pans out, there are going to be a lot of people on one side that were totally, completely wrong. I doubt there is much middle ground for this.

elorant 8y ago
And then there are those of us who sit in the middle. Regardless of whether Bitcoin is a bubble or not, the thing is that you can't do much with it. There are few companies here and there that support it but for the best part everyone's sitting on their stack waiting for wider adoption from the real world in the future. As long as this isn't happening the whole discussion regarding Bitcoin is irrelevant. What's the point of having "money" you can't use as such.
- xxxdarrenxxx 8y ago
  Traditional money value has little to do with money anyway. America has an insane debt. Yet they still have power, while a single person with such relative debt goes to jail. Likewise, in terms of raw resources and precious material potentials, Europe has nothing in the ground compared to africa, but who are considered more wealthy by image, physical living standards and trade equity. Money is not really backed by gold or numbers, but backed by power off governments behind them and the (potential) whooping they will bring. However fancy a currency is, a government decides whether it will be acknowledged globally and within society.
asynchrony 8y ago
I don't think there's that much disagreement over the effectiveness of blockchain for managing decentralized ledgers (cryptocurrencies). There's rather more contention about the applicability of blockchain to other spaces.

21 8y ago

Imagine that the year is 2011, Bitcoin appears for one of the first times on HN, and someone says "in the future Goldman will trade bitcoin". Ha ha ha ha ha.... Today, someone (me) says: in the future, first world central banks will hold bitcoin as a reserve among the usual things (dollars, euros, gold, ...)

atomical 8y ago
What does being right about a prediction mean to you?
- 21 8y ago
  I'm not sure what you are asking here. I do trade bitcoin, with an eye towards holding it for a bunch of years, possibly with leverage, so being right would make me money.
  - atomical 8y ago
    You seem quite amused that you were right about a prediction. It must mean something to be right about the future, correct? Some personal achievement?
lern_too_spel 8y ago
Goldman isn't holding Bitcoin itself. They're not stupid.
- Scott_Sanderson 8y ago
  Why would they be stupid to hold the bitcoin themselves? If they don't hold the private keys, then whoever does could lose them.
  - colatkinson 8y ago
    If they hold the Bitcoin themselves, they have to deal with securely holding the keys, compliance, and insurance. If someone else holds them, then this third party has all of these issues while GS will still get some kind of insurance payout if there is a catastrophic loss. Similarly, I doubt that GS commodity traders have warehouses full of gold/silver/oil.

pembrook 8y ago

Re: Goldman’s activity pumping and dumping IPO’s they knew to be worthless to screw over retail investors during the late 90s tech bubble. Read Matt Taibbi’s hyperbolic yet mostly accurate Rolling Stone article for more info. It’s safe to assume Goldman isn’t neccesarily getting into bitcoin because it believes in the technology.

klipt 8y ago
They believe it will make them money, which is all they care about. Bitcoin probably won't cure cancer, but Goldman isn't in the business of curing cancer anyway...
- ISL 8y ago
  They would be if they knew how, as would almost anyone else.
  - klipt 8y ago
    Not really? There are professional oncology researchers out there but they work at universities, research hospitals, and pharma companies, not finance companies like Goldman.

BigChiefSmokem 8y ago

The mighty USD is going to have a rough time going up against the Yuan (and the Silk Road) and Bitcoin to be crowned as the new global standard.

nikolay 8y ago
In a doomed parallel universe - sure!
MadSudaca 8y ago
If the dollar has it rough we'll all have it rough.
bcheung 8y ago
Always bet on the US banking industrial complex securing its interests by whatever means necessary. All of this has happened before and will happen again. https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
- anonytrary 8y ago
  This is... appalling and depressing.

nikolay 8y ago

So Bitcoin is anything but it was it was supposed to be. And I wonder why people still care about this scam!

DINKDINK 8y ago
>Bitcoin is anything but it was it was supposed to be Bitcoin was suppose to be an open, peer-to-peer, decentralized, self-sovereign value transfer network. After GS facilitates BTC trades, bitcoin will be an open, peer-to-peer, decentralized, self-sovereign value transfer network.

joejerryronnie 8y ago

Goldman Sachs is not opening a bitcoin trading operation because they believe in the legitimacy of blockchain tech. The only reason Goldman is doing this is because they smell money and realize that jumping into a bubble can net them hundreds of millions/billions of dollars in profit. They are not going to make money from buying bitcoin, they are going to make money in fees they charge other large clients to buy/sell/hedge/etc bitcoin. They'll also create some exotic bitcoin-based financial instruments that nobody can understand but will sell to pension funds for gobs of money. Will blockchain revolutionize tech and business in general? Will a Bitcoin be worth a million bucks some day? Will crypto replace traditional currency? I don't know - but I guarantee that is not the angle Goldman is playing here.

d0ugie 8y ago
Goldman is experimenting, not smelling big bucks. Other firms, namely JPMorgan, won't touch bitcoin for the same reasons they train every employee over and over how to stay away from money laundering red flags. Banks have populist targets on their backs, getting involved with Bitcoin elevates the bright redness of those targets. But Goldman is uniquely smart and I'm intrigued. Guess I'll add them as a custom Google News section...
- joejerryronnie 8y ago
  Goldman is very smart but they are also willing to throw ethics out the window and put huge swaths of society at financial risk if they can capitalize on it. I like them as an investment but they are kind of the epitome of capitalism's worst excess.

bunkydoo 8y ago

Goldman Sucks

dang 8y ago
Maybe so, but please don't post unsubstantive comments here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

known 8y ago

Can Blockchain replace Fed?

sjwright 8y ago
No, because there is always a need for artificially stabilised currency. When you bought lunch today, you know you weren't being ripped off because $10 is worth the same as yesterday, and roughly the same as when you earned it a few months ago.
- rmnblm 8y ago
  Take a look at https://makerdao.com/ https://makerdao.com/
- anonytrary 8y ago
  > No, because there is always a need for artificially stabilised currency. This is a mathematical assertion and requires a proof.
  - sjwright 8y ago
    No, it's a musical assertion and requires lyrics. That's how dumb you sound.
    - anonytrary 8y ago
      > That's how dumb you sound. This is HackerNews, not Reddit; comments like this are typically ignored. You are claiming that all currencies require active stabilization; that a currency is unstable without outside intervention. Where's the economics that supports your claim? You can cite it, if you want. Your retort regarding music is irrelevant, and it looks like you missed my point. Instead of writing a paragraph, I observed that you are "making an inherently theoretical claim which you haven't backed up". Why do you believe intervention is required for stability? Do you have a theory; can you cite a theory? I'm not sure why the question was confusing to you, nor why you took it as an offense. I'm sure other people would love to hear you justify your socialist, "hands-on" viewpoint.

rajacombinator 8y ago

Where there are muppets ...err clients ... to be fleeced, Goldman will be there!

adolfinthecuts 8y ago

fuck em, we'd all love to jack for shekelbits duck em, its not for the jew satoshi to my central intelligence you're obsolete delete, defeat, meat its not for the jew anonymous killers on your street tel aviv to jerusalem my sense no combat robots on the beat another titanic sunk .. stunk .. w on on on tigers blood copies of self replicating dud kike im pumpin gas takin shekelbits you were selfish , hellish , wellish ish electrocute fish aint no takin shekelbits duds see the flash and go blast to black you will never see th e last

partycoder 8y ago

There might be many bad aspects about cryptocurrencies. But they don't have to be perfect, they just need to be better than what currently exists. ACH and SWIFT are, at their very best, mediocre and sad when technologically compared to blockchain. In fairness though, if all transactions made it into a blockchain, fewer and fewer people would be able to store it in their computers, let alone process it.

pedrocr 8y ago
>ACH and SWIFT are, at their very best, mediocre and sad when technologically compared to blockchain. Quite the contrary. Modern banking transfer technologies are much better than Bitcoin at what they do. They're orders of magnitude more energy efficient and also much faster than waiting for blockchain confirmation of transactions. Banks are usually quite bad at exposing that functionality to clients but the actual technology beats Bitcoin easily. That's not even surprising. Sending a few messages over the internet and updating a couple of database registers is massively simpler than running a distributed PoW ledger.
- Chris_Jay 8y ago
  I want to know where you bank.
  - pedrocr 8y ago
    "Banks are usually quite bad at exposing that functionality to clients" And here are those technologies properly exposed: https://play.google.com/store/apps/details?id=pt.sibs.android.mbway&hl=en_US https://play.google.com/store/apps/details?id=pt.sibs.androi... Immediate transactions between individuals in the traditional banking system.

ashelmire 8y ago

This was news in the fall, wasn’t it? Trying to renew the hype it seems. https://www.bloomberg.com/news/articles/2017-12-21/goldman-is-said-to-be-building-a-cryptocurrency-trading-desk https://www.bloomberg.com/news/articles/2017-12-21/goldman-i...